Despite the announcement that billionaire Elon Musk has frozen Twitter’s $ 44 billion acquisition, the company’s board of directors is still waiting to process the acquisition.
Musk announced that it would suspend the deal until the percentage of fake accounts on Twitter is known, which is estimated at 5 percent of the active users in its reports, the company said in a statement. The Wall Street Journal.
Can Musk or Twitter drop the deal?
The newspaper report shows that dropping any party from the contract will not be an easy task, especially in light of the fact that both parties have signed a merger agreement that includes specific details of what each party will do to conclude the agreed agreement.
The agreement also includes the legal rights that each of them enjoys so as not to prevent the termination of the contract.
The report points out that Musk’s enthusiasm for negotiating the Twitter deal quickly led him to agree to certain elements that would allow Twitter to pursue the deal, in what is known as “specific performance.”
If for some reason the so-called “termination fee” identified in the three specific circumstances fails to reach an agreement, both parties agree to pay $ 1 billion.
Musk could abandon the deal and pay $ 1 billion in three specific circumstances: if regulators try to block the deal, fail to raise the necessary funds, or prove that Twitter has changed for the worse since the deal was agreed.
The report points out that Musk may have sought the fact that the number of fake accounts on Twitter at the time of signing the deal was inaccurate or that Twitter had tried to distort this information in its statements, which could open the door for discussions on the matter. Solution.
For his part, Twitter’s board of directors feels the deal with Musk is still valid, and said “we intend to finalize the deal and implement the merger agreement”.
The report points out that Twitter could seek a “specific performance” rule to force Musk to continue the deal or provide fair compensation.
The newspaper pointed out that it was too early to speculate about the course of the deal, as it was still possible to finalize the deal and either could implement it soon next summer or negotiate if Musk wanted to leave. Reduce contract or price.
According to an earlier report by AFP, Twitter recently announced the departure of two of its top executives and the suspension of all non-essential appointments in the midst of the group’s acquisition of Musk.
In a presentation to investors, Musk said in a presentation to the New York Times that the company could increase its revenue fivefold by 2028, dramatically increase subscription revenue and increase the number of active users from 217 million by 2021 to 931 million by 2028.
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